Key Takeaways

  • Financial stress impacts mental health and can lead to anxiety, depression and emotional distress.
  • Gender biases and systemic inequities contribute to financial stress among women, people of racial and ethnic minority groups and other underserved communities.
  • Pay gaps, limited access to credit and earning disparities exacerbate financial stress for women, people of racial and ethnic minority groups and other underserved groups.
  • Financial stress affects access to mental health care and creates barriers to career advancement.
  • Local nonprofits and Community Development Financial Institutions (CDFIs) can provide financial and mental health resources for underserved groups.

Understanding How Finances Impact Your Mental Health

Financial stress can significantly affect your mental health, leading to anxiety, depression and overall emotional distress. The constant worry about money, mounting debt and the inability to meet basic needs can create a sense of hopelessness, erode self-esteem and strain relationships – further exacerbating mental health challenges.

“The issue of financial stress is often overlooked in America, largely due to the lack of attention it receives from mainstream media and policymakers,” Gary Tucker, chief clinical officer at D’Amore Mental Health in California told Annuity.org. 

Financial and mental health professionals who responded to Annuity.org repeatedly cited the fact that financial stress tends to be viewed as a personal issue, rather than a systemic problem, and mental health approaches to financial stress often take the same approach.

However, systemic inequality in finance puts women, people of racial and ethnic minority groups and people in other underserved communities at higher risk of financial stress. These groups are often left out of the conversation on financial stress according to many of the experts who spoke with Annuity.org.

“Maybe it’s because of the so-called ‘American Dream’ — the idea that anyone can climb the ladder of success with a bit of elbow grease,” Andrew Gosselin, a CPA and senior editor of Money Inc, told Annuity.org. “But this notion often overlooks the roadblocks preventing many from moving up the socioeconomic ladder.”

Financial trouble or disagreements about money are two of the most reported causes for marital strife.  Many clients initially treat financial planning meetings like a therapy session because their stress and frustration over their finances need an outlet.  Working with an unbiased third-party, whether they are a professional planner, coach, or community member, can help untangle the underlying issues before laying out a financial strategy to move forward.

Race and Gender: Different Finance and Mental Health Obstacles

The relationship between financial worries and psychological distress varies between different socio-economic groups, according to a 2022 study in the Journal of Family Economic Issues.

Women, people of racial and ethnic minority groups and other underserved populations are among the groups most at risk of financial stress.

Pay Gaps Create Financial Stress

Women may face obstacles due to the gender pay gap or when returning to work after caring for family members. 

“It’s essential for women to remain positive and feel optimistic that their financial goals are attainable and that they are empowered to succeed,” Sahang-Hee Hahn, head of strategy and planning at Haven Life, told Annuity.org. “It can be challenging to save and invest for the future if you are pessimistic or feel discouraged about your long-term financial outlook.”

Financial stress among women can be exacerbated by the wage gap. A 2022 Pew Research Center analysis found that women only earned 82% of what men received. This can be significant over a life-long career.

Gender Pay Gap of Lifetime Earnings

People of color may face financial discrimination and limited access to credit. Low-income communities may struggle with debt and limited resources for financial goals. There are clear earnings disparities among different communities based on race and ethnicity.

U.S. Earnings Disparity Relative to White Workers

Financial Distress and Access to Mental Health Care

People face financial and emotional stress due to wage discrimination and barriers to career advancement. But too often, the main focus is on the financial part of “financial stress.”

It’s just as important to focus on the “stress” part of that equation, according to Natalia Samman, a licensed clinical social worker who specializes in coaching people experiencing career-related burnout.

“Underserved populations are less likely to have the safety net of generational wealth,” Samman told Annuity.org. “They don’t get to say, ‘Well, if I lose my job, I know my parents would help me out.’”

Financial therapists seek to bridge this gap. These professionals are uniquely trained to explore the emotional and psychological aspects of money, helping people navigate the intricate web of financial stress.

By delving into clients’ beliefs, attitudes and behaviors around money, financial therapists can uncover deep-seated issues contributing to financial stress. Through tailored counseling and therapeutic techniques, they guide individuals in developing healthier money mindsets and managing their financial challenges more effectively, ultimately improving their mental well-being.

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Systemic Causes for Financial Stress in Underserved Communities

In addition to gender, ethnic, and racial pay gaps in America, Black, Indigenous and People of Color continue to face systemic racism in the personal finance field, according to Kate Mielitz, a Ph.D. in personal financial planning at debt resolution company Beyond Finance. She says access to basic banking products can be difficult and many are targeted with subprime lending products. 

“There are power dynamics associated with money, and people who are perceived to not be in a power position — commonly women, people who do not present as white and people who live in rural areas — are often not allowed to use equitably priced products,” Mielitz told Annuity.org.

An increasing number of Americans have reported poor mental health since the start of the COVID-19 pandemic, according to the Kaiser Family Foundation. The study found that negative mental health effects had disproportionately affected young adults and communities of color. 

“The prospect of poverty is not some rhetorical lesson that was taught in a social studies class, it is a very real possibility that hovers as a constant, vivid threat,” Samman said.

Her clients worry that one crisis, one emergency, can put them back — financially — to where they started.

“They are climbing a steeper staircase, weighed down by a heavy ball-and-chain,” Samman said.

Meanwhile, access to mental health care for many of these groups has continued to deteriorate since even before the pandemic, according to the Kaiser Family Foundation study.

Financial Discrimination and Its Impact

A long history of discrimination in the United States created systemic structures that continue to hurt consumers today, according to testimony from Lisa Rice, President and Chief Executive Officer at the National Fair Housing Alliance, to the U.S. Senate.

Rice testified that these systemic inequalities “harms individuals and neighborhoods, stifles innovation, restricts economic progress, [and] generates wealth loss.”

Underserved populations also face significant barriers when it comes to accessing essential mental health support and financial advising services, according to Samman. They are disproportionately targeted by predatory lending practices, which perpetuates financial instability.  In addition, they experience higher rates of chronic health issues due to limited access to proper nutrition and healthcare resources.

“It is impossible to isolate a single systemic factor that contributes to financial stress and mental health for underserved populations,” Samman said. “There are so many factors that add up to become a ton of bricks.”

Cultural Stigmas Surrounding Finances and Mental Health

Cultural stigmas surrounding finances can also contribute to financial stress for women, people of racial and ethnic minority groups and other underserved communities. 

These stigmas may include gender biases that limit women’s financial autonomy; societal expectations that discourage open discussions about money; and cultural beliefs that hinder financial literacy and empowerment. 

There can be racial and ethnic biases that restrict access to opportunities, sustain wealth disparities and result in limited financial resources. In many cultures, conversations about personal finances have traditionally been regarded as taboo, uncomfortable or even disrespectful, leading to an environment of secrecy.

“Our financial stress is ‘pooh-poohed’ — as my mother would say — because someone can always perceive that they have it worse,” Mielitz said.

Many people also associate shame with talking about aspects of their personal finances, according to Mielitz. She says people may fear they’ll be judged for being financially stressed, ashamed for making too little or too much compared to their peers, or judged for the debt they have.

However, discussing finances openly can be transformative. Encouraging transparent dialogue within families and communities can help normalize these discussions and reduce the burden of shame. By sharing experiences, challenges and strategies for financial success, individuals can learn from one another and collectively work toward financial empowerment.

How To Break the Stigma

Overcoming these stigmas requires addressing systemic inequalities, promoting inclusive financial education and fostering a supportive environment that encourages individuals from all backgrounds to seek financial well-being and success.

“We need to normalize talking about money,” Mielitz said.

This includes talking to others about your salary, debt, use of credit and budgeting. She also suggests confronting your financial stress head-on rather than sweeping it under the rug.

Breaking deeply embedded cultural stigmas around money is no small feat and can be met with resistance if not approached thoughtfully. These beliefs and practices often span generations, ingrained in family and community dynamics. Therefore, introducing open conversations about finances and mental health requires patience, understanding and a non-judgmental approach. 

Encouraging individuals to share their experiences and challenges gradually can help ease the discomfort associated with these discussions. It’s important to approach these conversations with empathy while respecting cultural sensitivities to foster an environment where people feel safe to engage. Remember, the process of breaking cultural stigmas is a journey, and progress may be slow, but the potential for positive change and improved financial and mental well-being is worth every effort.

Resources for Racial Minority and Other Underserved Groups

If you’re experiencing financial stress, there are local nonprofits that can offer you financial or mental health resources. Mielitz recommends looking for Community Development Financial Institutions, also known as CDFIs. These institutions finance small businesses, affordable housing, commercial real estate and more. You can use an online CDFI locator to find a local CDFI.

There may be several resources available in your area to help deal with financial stress. But like many important aspects involving financial stress, they are not typically highlighted.

“The key, though, is to shine a brighter spotlight on these resources so that those who need them know where to look,” Gosselin said.

Financial & Mental Health Resources for Women, People of Racial and Ethnic Minority Groups & Other Underserved Communities

AFCPE.org
This tool can connect you with an Accredited Financial Counselor. AFCs focus on foundational personal finance and meet people wherever they are financially in their lives.
Black Business Association
The BBA partners with over 100 trade associations to support African American entrepreneurs and over 85,000 minority-owned businesses. They prioritize diversity and inclusion in business.
Financial Therapy Association
This site can connect you with a financial therapist. These are professionals who have both financial and mental health training.
NAMI
The National Alliance on Mental Illness helps those affected by mental illness and it works to end the stigma around mental health. NAMI offers resources and support to those in need with a grassroots approach.
Women’s Business Development Center
The WBDC provides coaching, digital learning, financial education and contracting assistance to help empower women business owners.
LetsMakeAPlan.org
This site can connect you with a CERTIFIED FINANCIAL PLANNER™ professional. CFP® professionals focus on long-term financial planning and growing your wealth.
United Way
There are more than 1,100 local United Way centers around the world. Many offer financial coaching with a focus on financial stability. You can contact your local United Way for more information.
Utilizing Health Insurance Benefits
Many health insurance plans offer coverage for therapy and counseling services. Don’t hesitate to reach out to mental health professionals who can provide guidance on managing financial stress.
Leveraging Employee Assistance Programs (EAPs)
For those fortunate to have access to an Employee Assistance Program through their employer, these resources can be incredibly valuable. EAPs often include counseling services and financial consultations to help employees navigate various stressors, including financial ones.

“Don’t be discouraged by taking small steps, because any small step in the right direction has a compounding effect over time,” says psychotherapist Georgiana Avram. “You can break the cycle of struggle when it comes to finances.”

Kate heads the client financial counseling program at Beyond Finance, a leading debt resolution firm. Formerly a special programs manager of the Association for Financial Counseling & Planning Education (AFCPE), she has more than 20 years of experience in the financial services industry and higher education. She has also been a research fellow at American College, a graduate teaching assistant at Kansas State University and most recently, an associate professor at Oklahoma State University. 

Sahang-Hee Hahn is the head of strategy and planning at Haven Life Insurance Agency, a wholly-owned subsidiary of MassMutual, where she oversees and shapes the company’s business strategy and communicates Haven Life’s strategic vision. Sahang-Hee has over 10 years of experience in the financial industry, serving in strategic business and legal roles. She received an M.B.A. from the Wharton School, where she majored in finance and management.  Sahang-Hee also possesses a J.D. from the Washington and Lee University School of Law, and she obtained her B.A., magna cum laude, in English from the University of Pennsylvania School of Arts & Sciences.

Natalia Samman Coaching and Consulting LLC, Denver, CO

Natalia is a licensed mental health professional in the states of Colorado and Massachusetts. Her firm specializes in coaching people who have experienced burnout. She applies her knowledge of mental health to coach professionals on managing work stress to prevent burnout. As a coach, she points out that she does not offer mental health or financial advisory services.

Gary’s personal experiences with addiction and mental health issues in his family inspired him to help others facing similar struggles. Despite his career as a businessman, he pursued his passion for helping others by returning to school and becoming a licensed psychotherapist. He now has a decade of experience in the field and is dedicated to making a positive impact in the lives of his clients.

Georgiana is a licensed clinical professional counselor who specializes in life transitions, self-esteem, relationship issues, and women’s and men’s issues. She also works with immigrant populations, small business owners and artists. She holds a Masters of Education in mental health counseling from Hunter College in New York.

Andrew Gosselin, CPA, is a former senior strategy consultant for a global, multi-billion-dollar software company. He is the senior contributor and editor at Money Inc, and he holds degrees in accounting, finance and global perspectives from Bentley University, in Waltham, MA

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: May 22, 2024